Professional Documents
Culture Documents
Introduction
This paper emerges from our attempt to define the appropriate domain of the
business ethics curriculum for the purposes of writing a business ethics textbook in
English relevant to European audiences (see Crane and Matten, 2004). Having been
teaching business ethics for a number of years, we had for a number of reasons
become dissatisfied with the main texts currently on the market in the English
language1. Although one of these reasons was purely the US dominance of the
business ethics textbook market, this was accompanied by a deeper concern that the
available texts simply did not seem to cover in any real depth (if at all) many of the
areas of business activity that we felt were increasingly relevant, and indeed central, to
the business ethics curriculum. This included relatively new concepts and issues, such
as globalization, sustainability, and corporate citizenship, as well as specific questions
about the ethics of business relations to government, civil society, and other noneconomic stakeholders.
What was most significant about our attempts to introduce such concepts into our
teaching, and then into the textbook, was that they actually drove us to begin
reconsidering the very domain of the business ethics curriculum. Whereas we had
always been relatively happy with the idea that business ethics effectively began
where the law ended, consideration of these further issues and concepts increasingly
turned our attention to the role of business in shaping and defining the law and other
forms of regulatory activity. So, rather than just being concerned with issues where the
law could not, or had yet to, define right and wrong if you like, the classic ethical
dilemma situation we had begun to think of business ethics also in terms of how
businesses (as well as governments and civil society organizations) contributed to the
institutionalisation of certain laws, rules and rule-making processes in society. This, we
would suggest is more a situation of ethical institution building, which it would appear
from the themes of recent business ethics conferences such as the 2003 European
Business Ethics Network (EBEN) conference, has become a major issue in current
debates about the subject.
This paper stakes out our view of the potential domain of the business ethics
curriculum in this context, and further examines the theoretical, cultural and practical
arguments that might support or contest particular views of the appropriate domain of
the subject. In particular, we first set out the domain of business ethics as represented
1
Europe and elsewhere. Significantly, the US market has seen something of a cleavage
between dedicated business ethics books and business and society books, with
Carroll and Buchholtz (2000) and Thorne McAllister et al. (2003) representing key
examples of the latter. This hiving off of societal issues from the business ethics
curriculum has reinforced an emphasis in the business ethics subject on individual
values and dilemmas and the management of internal decision-making that is
symptomatic of the Anglo-American tradition of the subject (Enderle, 1996).
We will examine the significance of this and other regional approaches to business
ethics in more detail in the next section, but it is evident that the micro focus of US
texts is also manifested in the growing collection of UK authored texts that have
entered the market. The last few years have seen a number of new UK books,
including those by McEwan (2001), Mellahi and Wood (2002), and Fisher and Lovell
(2003), and with titles such as Managing values and beliefs in organizations (McEwan)
and Business ethics and values (Fisher and Lovell), the micro focus of the curriculum
covered is made fairly explicit.2
Looking to the domain of business ethics defined by such books, there are actually few
formal definitions in evidence. Probably the clearest example is posited by Trevio and
Nelson (2004: 16) in their popular textbook Managing Business Ethics where they
state that the domain of ethics includes the law but extends beyond it.3 In order to
represent this relationship, Trevio and Nelson (2004) depict ethics and the law as two
intersecting circles, similar to that shown in Figure 1. The law might be said to be a
definition of the minimum acceptable standards of behaviour. However, many morally
contestable issues, whether in business or elsewhere, are not explicitly covered by the
law. For example, there is no law in many countries preventing businesses from testing
their products on animals, selling landmines to oppressive regimes, or preventing their
employees from joining a union yet these are issues which many feel very strongly
about from an ethical point of view. Similarly, it is possible to think of issues that are
covered by the law, but which are not really about ethics. For example, the law
prescribes whether we should drive on the right or the left side of the road. Although
this prevents chaos on the roads, the decision about which side we should drive is not
an ethical decision as such.
Ethics
Law
In one sense then, the domain of business ethics can be said to begin where the law
ends. Business ethics is primarily concerned with those issues not covered by the law,
or where there is no definite consensus on whether something is right or wrong.
Discussion about the ethics of particular business practices may eventually lead to
legislation once some kind of consensus is reached as Beauchamp and Bowie
(2004: 4) contend, law is the publics agency for translating morality into explicit social
guidelines and practices but for most of the issues of interest to business ethics, the
law typically does not currently provide us with guidance. For this reason, it is often
said that business ethics is about the grey areas of business, or about going beyond
the legal minimum. Another good illustration of this view is the well-known, and widely
cited Carroll pyramid, which describes four elements of corporate social responsibility
(Carroll, 1991). Most notably, ethical responsibilities are depicted as those that are
above and beyond legal responsibilities.
This is all very well, and such a view certainly seems to be a good starting place for
locating the domain of business ethics. After all, once matters have passed into law,
there is certainly less obvious reason to consider them as part of a business ethics
4
course rather than in a law course, unless of course there is a grey area wherein illegal
practice is difficult to establish, identify, or prevent. But the key thing is that defining
business ethics in this way tends to focus our attention on classic ethical situations
such as high pressure sales techniques, whistleblowing, advertising to children,
employee privacy, or gift giving where the law can not, or has yet to, define right and
wrong. These dilemmas, important as they are, automatically put the manager or the
organization in the position of a hostage to fortune ethical dilemmas and problems
will continue to confront because they are always in the grey area unless government
intervenes with a change of the law. This is the basis of the classic Friedman (1970)
argument, that the rules of the game have already been determined. What this seems
to exclude, or at least ignore, is the potential for businesses to participate in the making
of the law, or more generally in defining rules and rule-making processes and the
processes of ethical institution building that we mentioned earlier (see Crane et al.,
2003). This is particularly an issue in an increasingly globalizing business environment
(Sethi, 2003), where we would suggest that business can participate in shifting the
boundaries of what is legal or ethical, in essentially lightening the hue of the grey areas
towards greater clarity and certainty.
Should such processes or arguments thereof be part of the business ethics
curriculum? Is such a definition, or even extension, of the domain of the business
ethics curriculum warranted or appropriate? Is it indeed even new, or is this what many
business ethics scholars already teach their students about? And what exactly does, or
would, it imply in terms of teaching practice? In the next four sections, we shall explore
a number of theoretical, cultural, and practical developments that, we contend, help to
throw some light on some of these issues. These, as we indicated earlier, can be
broadly categorised as a set of four interweaving forces, namely: regional approaches
to business ethics, corporate scandals, impacts of globalization, and institutional shifts.
These are shown in Figure 2 and are described in more detail below.
Institutional
shifts
Business ethics
curriculum
Corporate
scandals
Globalization
and regulation
are not necessarily on the agenda from an American perspective (Spence, 2002).
Likewise, Europe has quite a distinct historical, philosophical and religious legacy,
giving rise to a different approach to the study, as well as the practice, of business
ethics in Europe (Zsolnai, 1998; von Weltzien Hoivik, 2002).
Table 1: Differences between approaches to business ethics in Europe and the
United States
United States
Who is responsible for
ethical conduct in business?
Who is the key actor in
business ethics?
The individual
Corporate codes of
ethics
Misconduct and
immorality in single
decisions situations
Focus on shareholder
value
The corporation
Europe
Social control by the
collective
Government, trade
unions, corporate
associations
Negotiated legal
framework of business
Social issues in
organizing the
framework of business
Multiple stakeholder
approach
Table 1 provides a summary of the main differences between the European and US
approaches to the subject, as described by authors such as van Luijk (1990), Vogel
(1992; 1998) and Enderle (1996). Perhaps the key issue here is the proposition that
continental European business ethics has tended to focus more on the choice of
constraints for ethical decision-making compared with the Anglo-American approach of
focusing on choice within constraints (Enderle, 1996). The source of this contention is
that in most European countries there has been quite a dense network of regulation on
most of the ethically important issues for business, including workers rights, social and
medical care, and community contributions (through corporate taxation). European
managers could be said therefore to have traditionally not had to consider so very
much the moral values which should guide their decisions since these questions have,
at least in principle, been tackled by the government in setting up a tight institutional
framework for businesses. Therefore, in Europe, governments, trade unions and
corporate associations have typically been key actors in the business ethics
curriculum, whereas in the US, in most (but not all) areas, the institutional framework of
business ethics has been significantly looser, and so the key actor has tended to be
7
the corporation or the individual manager. This, at least partly explains the more
practical approach to business ethics evident in the US approach (Vogel, 1992;
Enderle, 1996), and underscores the ethical dilemma approach to business ethics that
we identified earlier.
With shifts in the European model of capitalism towards a more Anglo-American
approach (Hunt, 2000; Mayer and Whittington, 2002), it could be contended that the
business ethics curriculum will move towards a more micro focus. However, our
analysis suggests that in fact, this exposes a need to increasingly broach individual,
corporate, and institutional levels of analysis in order to provide a critical lens on
current business practice. This is because specific micro dilemmas and broader
macro context are interrelated or as Kaler (2000) puts it, their relationship is one of
epistemological dependence. For instance, he uses the example of an ostensibly
micro problem, executive pay, to argue that although this can be approached as a
purely micro problem, any answers produced will presuppose answers to other and
distinctly macro questions (2000: 261), namely about issues such as executive
accountability, corporate governance, responsibility to stakeholders, and ultimately the
social role of business. The same could be said for a whole host of apparently micro
problems such as bribery, downsizing, or labour conditions, which are at once
immediately relevant to individual managers, yet deeply embedded in macro
structures. What this demonstrates then, Kaler (2000: 261) argues, is that while micro
questions can be discussed without questioning the system as a whole, any answers
to those same micro questions might only be as good answers to the macro issues
which they will very often entail.
Corporate scandals
A similar argument can be made in relation to our second issue of consideration,
corporate scandals, which it might be said have prompted renewed discussion about
the scope and purpose of business ethics education. In one sense, it could be said that
the typical US approach of focusing on the individual actions of the manager has
received further impetus from the spate of corporate scandals involving companies
such as Enron, Worldcom, Andersen, and others. To many, these are incidents of
personal greed and misconduct that need to be analysed from the perspective of
individual decision-making.
However, in a closer analysis it becomes rather evident that individual immorality, or
8
Impact of globalization
This leads to our third area of consideration, namely the impact of globalization on the
9
role and relevance of national and transnational regulation of business activity. The
power of a government has traditionally been confined to a certain territory, for
example: French laws are only binding on French territory, UK laws on UK territory,
and so on. As soon as a company leaves its home territory and moves part of its
production chain to, for example, a third world country, the legal framework becomes
very different. Consequently, managers can no longer simply rely on the legal
framework when deciding on the right or wrong of certain business practices
(Donaldson, 1996).
If business ethics essentially begins where the law ends, then such forces of
globalization increase the demand for business ethics because deterritorialized or
transnational spaces such as global financial markets or the ozone layer are beyond
the control of national (territorial) governments (see Scholte, 2000). However, in the
absence of effective global regulation and governance by governments, what we have
also increasingly witnessed is business itself becoming more involved standard setting
and enforcement, through self-regulation, global codes of conduct, ethical sourcing etc
(Ronit, 2001; Cashore, 2002). This regulatory function of businesses actually pertains
to the broadest array of levels, from the company level through to the industry level, to
national and international levels (see Crane and Matten, 2004: 387-434)
At the company level, most companies operate company-wide codes of practice about
a variety of ethical issues such as the usage of PCs or email for private purposes, the
acceptance of gifts and hospitality from suppliers, or corporate policies on child labour
or human rights in general. These company codes and policies, in a sense, substitute
for, or reinforce, legal or regulatory instruments of government.
At the industry level, it is evident that in some circumstances these company-specific
codes are supplanted by industry-wide codes that maintain a level playing field for all
competitors or maintain a good reputation for an entire industry. An example of the first
category would be the efforts by the sporting goods industry to ensure compliance with
labour standards (van Tulder and Kolk, 2001), while an example of the second would
be the Responsible Care programme of the chemical industry (King and Lenox, 2000).
As these examples show, industry codes vary from national to international in scope.
At the national level, there are a number of initiatives where industry self-regulation
pertains to a particular country. These would include, for example, the Financial
10
Services Authority (FSA) in the UK, which self-regulates the countrys financial
industry. In Europe, the area of environmental issues has frequently been addressed
by national self-regulatory initiatives which have anticipated governmental acts by
setting up sectoral and cross-sectoral programmes of corporate self-commitment (ten
Brink, 2002).
At the international or global level, there have been a few initiatives of global selfregulation (or at least non-governmental regulation), which have substituted for direct
legislative action. Most notable are the codes set up by the International Standard
Organization in the area of quality (ISO 9000) and the environment (ISO 14000). The
most recent example would be the United Nations initiative of the Global Compact as
a voluntary scheme of global reach by which corporations voluntarily subscribe to nine
ethical principles and assume responsibility for their company wide implementation
and enforcement (McIntosh et al., 2003).
The main implication of our argument here then is that the earlier cited narrow view of
business ethics (where the law ends) does not correspond with the reality of business
today. Corporations are quite heavily involved and by all accounts more and more so
in setting and shaping the law and it is exactly here where moral issues are
increasingly evaluated and ethical decision-making enacted. We can conclude from
this that business ethics in fact is an important issue far earlier and is highly relevant
also, as it were, where the law begins and consequently, business ethics as a
discipline can no longer exclude this area from its core body of academic inquiry and
instruction.
Critics, however, might contend, that the character, status and processual antecedents
of regulation made by business can hardly be compared to laws issued by
governments. While we agree in principle to this point we would argue that this only
exposes another important shift in the ramifications of business ethics today. Laws,
and regulation in general, are increasingly not made by governments alone or by
other individual social actors for that matter but rather are products of multi-actor
coalitions. Amidst these privatised processes of legislating in which, we would admit,
governments still have a key role to play, laws come into existence in close
cooperation and interaction with a broad array of actors, including business, but also
involving other governmental and non-governmental actors.
11
Institutional shifts
This leads onto our final main area, namely the implications for the business ethics
curriculum of changes in the role and power of the institutions of business, government
and civil society. It is, we would contend, increasingly myopic to address business
ethics in isolation from civil (NGO) and governmental activities. There are two main
factors involved here.
First, many business ethics decisions in corporations have become significantly
influenced by civil society action, whether because of direct action on corporations by
civil society through protest and boycott, and/or because of the increasing propensity
to develop business partnerships with civil society organizations to deal with ethical
problems as diverse as labour standards, corruption, and sustainability practices (for
examples, see Bendell, 2000). This has led to the development of the idea of the civil
regulation of corporations by non-government organizations (Bendell, 2000; Zadek,
2001), suggesting that business-civil society relations are intrinsically caught up in the
processes of setting the standards for evaluating business ethics.
Secondly, just as business has increasingly worked with civil society to address social,
ethical, and environmental problems, so too have corporations joined governmental
organizations, and intergovernmental organizations such as the UN and the OECD, to
develop solutions to such problems. These developments, in concert with the efforts at
business self-regulation discussed in the previous section, and business-civil society
partnerships mentioned above, have contributed to a growing role for business in
actually shaping and enforcing the rules of the game that a micro focus on business
ethics largely accepts as given. Quite simply, the rules of the game are no longer a
strictly governmental responsibility, but are also influenced and enacted by business
and civil society through a variety of processes and mechanisms.
What this means is that whereas in the past business ethics has been primarily
concerned with either macro context issues, such as the regulatory environment
provided by government (in the European tradition), or specific micro dilemmas (in the
US tradition), what we see now is that corporate and civil society efforts to address
ethical dilemmas have had impacts on the regulatory environment itself. For example,
let us take the problem of labour standards in developing countries. Whilst we could
12
consider this either as a matter of insufficient legislation (or weak enforcement) in the
country concerned, or as a matter of ethical choice for a company operating there,
what we have seen happening here in recent years is a new system of softer
regulation or ethical institution building emerging from business attempts to respond
to criticism of their practices. This includes developments such as industry
programmes and codes like those emerging from the sporting goods industry (see van
Tulder and Kolk, 2001), multi-actor partnerships such as the Ethical Trading Initiative
and the UN Global Compact, or certification schemes such as the fair trade labelling
scheme.
Conclusion
In conclusion, we contend that questions about the domain of the business ethics
curriculum are both timely and necessary, but for all that cannot and should not be
conclusive. Waking up to these shifts could be said to move business ethics education
from an assumption of managers and corporations as reactive victims of
circumstance towards them being seen as masters of destiny, potentially able to
shape the rules and norms against which they are judged4. We certainly would
recommend and support further consideration on the part of business ethics educators
about these roles of business and their relationships with other institutional actors, but
at the same time, it is important to recognise that this takes the subject into relatively
uncharted water where the academic literature has only just started to make inroads,
and where business ethics scholars in particular have yet to really engage. Indeed,
some management scholars from outside the area of business ethics have been
critical about the subjects ability to engage with issues of political economy and adopt
a critical perspective on institutional arrangements (Parker, 2003). Although such
charges may perhaps be unfairly negative (especially given the European tradition of
business ethics), we do agree that greater attention to such issues may well be
necessary in designing and delivering business ethics courses.
Of course, other business subjects could also be reasonably charged with the
responsibility of accommodating the developments outlined in this paper, as could nonbusiness social science disciplines such as politics, international relations, and
sociology. However, this does not address the argument that many teachers and
students of business ethics are currently discussing broader questions of globalization,
corporate citizenship, government and civil society relations, sustainability, etc anyway,
13
14
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van Luijk, H. J. L.: 1990. 'Recent developments in European business ethics', Journal
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Acknowledgements: We would like to thank Jem Bendell, Malcolm McIntosh and Martin Parker for
their critical, but valuable contributions to our thoughts about the business ethics subject, and for the
reviewers and participants at the 2003 UK Teaching Business Ethics conference for their feedback on
an earlier version of this paper.
1
We should add that our paper chiefly draws on the debate in English language. We are well aware,
that in other, particularly European languages such as French, Spanish or German, the domains of
business ethics (or its corresponding concepts) are significantly different from the discussion in
English. In fact, as far as our (limited) acquaintance with some of the contributions reaches, our
arguments are partly informed by those different accents in these literatures.
2
Interestingly, probably the first UK book with the explicit intention to approach the subject from the
perspective of business and social practice in Britain and Western Europe by Sorrell and Hendry
(1994: IX) leaves the Anglo-American tradition as described above and differentiates into narrow and
broad business ethics. While the narrow view includes the traditional economic stakeholders, the
sections entitled broad business ethics look at constituencies beyond these, such as the state,
society in general, developing countries and the ecological environment.
3
Although this comment is made about ethics generally rather than business ethics specifically, it is
couched in a discussion about the relationship between business ethics and the law (Trevio and
Nelson, 2004: 16), and as such can be assumed to be intended to apply at the specific as well as the
general level.
3
We are indebted to Jem Bendell for this phrasing.
17
Published Papers
No. 01-2003
No. 02-2003
Christine Coupland
Corporate identities on the web: An exercise in the construction and deployment of
morality
No. 03-2003
David L. Owen
Recent developments in European social and environmental reporting and auditing
practice A critical evaluation and tentative prognosis
No. 04-2003
No. 05-2003
No. 06-2003
No. 07-2003
Robert J. Caruana
Morality in consumption: Towards a sociological perspective
No. 08-2003
No. 09-2003
No. 10-2003
No. 11-2003
No. 12-2003
No. 13-2003
No. 14-2003
No. 15-2003
Andrew Crane
In the company of spies: The ethics of industrial espionage
No. 16-2004
No. 17-2004
No. 18-2004
Brendan ODwyer
Stakeholder Democracy: Challenges and Contributions from Accountancy
No. 19-2004
James A. Fitchett
Buyers be Wary: Marketing Stakeholder Values and the Consumer
No. 20-2004
Jeremy Moon
Government as a Driver of Corporate Social Responsibility: The UK in Comparative
Perspective
No. 21-2004